Rupee Drops 9 Paisas Against Dollar in Post-Eid Holidays Demand

Rupee Drops 9 Paisas Against Dollar in Post-Eid Holidays Demand

The Pakistani Rupee witnessed a slight decline, dropping by 9 paisas against the US dollar on Thursday. This fall comes in the wake of heightened demand for foreign currency following the Eid-ul-Adha holidays.

The rupee ended at PKR 278.60 to the dollar, down from its previous closing of PKR 278.51 on June 14, 2024, in the interbank foreign exchange market.

Market experts attribute the rupee’s depreciation to the increased demand for the dollar, driven primarily by import and corporate payment requirements. The Eid-ul-Adha holidays, observed from June 17 to June 19, temporarily halted business activities, leading to a backlog in foreign currency demand once the markets reopened.

“The rupee was under pressure due to higher demand for the dollar for import and corporate payments,” a market analyst explained. Despite the pressure, the rupee displayed resilience, avoiding a significant decline against the dollar. This resilience is partially credited to positive economic indicators, including a narrowing current account deficit and a reduction in the trade deficit.

“The improvement in the current account and trade deficits has provided some support to the rupee,” noted another currency expert. “These factors contribute to a more favorable balance of payments situation, which in turn helps stabilize the currency.”

The recently announced 2024-25 budget has introduced strategic measures aimed at maintaining the rupee’s stability. These steps are designed to reduce the demand for imported goods, thereby strengthening the rupee’s value.

“The 2024-25 budget has introduced several measures to maintain the rupee’s stability,” said a currency analyst. “By discouraging non-essential imports, the government aims to reduce the demand for foreign currency, which helps in sustaining the rupee’s value.”

Throughout the trading day, the currency market experienced significant demand for the dollar for both import and corporate payments. However, the rupee managed to avoid a major decline, thanks to the positive economic outlook and strategic budgetary measures.

The budget includes various steps to curb non-essential imports, aiming to balance the country’s foreign exchange reserves and maintain the rupee’s value. These measures have bolstered market confidence, leading to the rupee’s relative stability.

However, experts caution that the growth targets set for the next fiscal year could lead to increased demand for imported raw materials and essential items. This rise in demand for dollars might put pressure on the rupee, potentially causing its value to fall.

“As the economy grows, so will the demand for imports, particularly raw materials and essential goods,” the analyst added. “This could increase the demand for dollars, which might negatively impact the rupee’s value in the longer term.”

In conclusion, while the rupee faced immediate pressure due to post-Eid holiday demands, strategic economic measures and positive indicators have helped stabilize its value. Moving forward, the balance between economic growth and foreign currency demand will be crucial in determining the rupee’s trajectory.